2026 Tax Changes Every Taxpayer Should Know

The 2026 tax year brings several important federal tax changes that could affect your tax bill, deductions, retirement planning, and estate planning. Many provisions that were previously scheduled to expire have now been made permanent, while several new deductions and limitations also take effect.

Here’s a summary of the biggest tax changes individuals should know for 2026.

1. Individual Tax Rates Remain Permanent

The current federal income tax brackets are now permanent, providing greater certainty for taxpayers. The seven tax rates remain:

This means taxpayers no longer face the scheduled expiration of the Tax Cuts and Jobs Act (TCJA) individual tax rates.

2. Qualified Business Income (QBI) Deduction Continues

The 20% Qualified Business Income (QBI) deduction under Section 199A is now permanent for eligible business owners.

Beginning in 2026, the income phase-in ranges are expanded, allowing more business owners to qualify before wage and property limitations begin to apply.

3. Child Tax Credit Remains Enhanced

Families continue to benefit from the expanded Child Tax Credit.

Up to $2,200 per qualifying child
Up to $1,700 may be refundable
$500 credit remains available for qualifying dependents who do not qualify for the Child Tax Credit

4. Higher Estate and Gift Tax Exemption

The federal estate and gift tax exemption increases to:

$15 million per individual
$30 million for married couples

The exemption will continue to be indexed for inflation in future years.

5. Alternative Minimum Tax (AMT) Changes

The Alternative Minimum Tax remains in effect, but higher-income taxpayers should be aware of updated exemption phaseout rules.

For 2026:

Phaseout begins at $500,000 for individuals
Phaseout begins at $1 million for married couples filing jointly

Some higher-income taxpayers may become subject to AMT sooner than in previous years.

6. New Deductions Continue Through 2028

Several temporary deductions remain available in 2026, including:

Qualified tip income deduction (up to $25,000)
Qualified overtime pay deduction (up to $12,500 single / $25,000 joint)

Both deductions are subject to income limitations, and employers must separately report qualifying amounts on tax forms.

7. Itemized Deduction Rules Become More Restrictive

Beginning in 2026, taxpayers in the highest tax bracket face a new limitation on the tax benefit of itemized deductions.

Charitable contributions also become subject to a new 0.5% of AGI floor before itemized deductions begin.

However, non-itemizers continue to benefit from a permanent above-the-line charitable deduction of:

$1,000 for Single filers
$2,000 for Married Filing Jointly

8. Mortgage Interest Rules Remain

The mortgage interest deduction continues to apply to acquisition debt of up to $750,000 for mortgages originated after December 15, 2017. Older qualifying mortgages may still be eligible under the previous $1 million limit.

9. Roth Catch-Up Contributions for Higher Earners

Beginning in 2026, employees earning more than $145,000 generally must make retirement catch-up contributions on a Roth (after-tax) basis rather than pre-tax.

10. Expanded Qualified Small Business Stock (QSBS) Benefits

Businesses and investors may benefit from expanded Qualified Small Business Stock (QSBS) rules for eligible stock issued after July 4, 2025.

Changes include:

Partial gain exclusions after three or four years
Full exclusion after five years
Maximum exclusion increased from $10 million to $15 million

What Could Still Change?

Congress may still consider additional tax legislation during 2026 that could affect certain business credits and deductions. While these proposals are not yet law, taxpayers should stay informed as new legislation develops.

Final Thoughts

The 2026 tax year offers more long-term certainty than previous years, thanks to permanent tax rates, the continued QBI deduction, and enhanced family tax benefits. However, new limitations on itemized deductions, revised AMT rules, and updated retirement contribution requirements make tax planning more important than ever.

Need help planning for the 2026 tax year? Our CPA team can help you maximize deductions, evaluate tax-saving opportunities, and create a personalized tax strategy before year-end.

Tax Rules That Could Affect You in 2026